Tucson Market Continues Retail Rebound

Tucson’s retail market continued an even pace in the second quarter of 2015 ending mid-year at 6.7% vacancy. Average asking rents were $14.27/sf, essentially unchanged since 2011.

Thanks to achieving the one-million population milestone, interest from retailers was not lacking. In addition to Broadway at Kolb, Natural Grocers will open two additional Tucson locations by year end at Broadway & Country Club and Orange Grove & Oracle. The stores will average 12KSF.

Natural Grocers complements the market entry of Haggen, who purchased three former Safeway and Albertson’s stores (since publication, Haggen has announced closure of two of those stores).

Tucson food and beverage users were active, from Commoner & Co. and Kneaders Bakery opening, to downtown activity such as the debut of Hub Ice Cream Factory and the much anticipated Johnny Gibson’s Downtown Market. Obon Sushi + Bar + Ramen at downtown Tucson’s east end is due to open in late summer.

In the absence of speculative construction, look for improved vacancy in the second half of 2015. Retailers along the Broadway corridor have mounted pressure on the city government to adopt a final design and give certainty to the business community, which faces frequent neighborhood opposition to any change to the corridor realignment design.

Passage of the fall Pima County bond initiatives would represent a stimulus; proposed city charter change would be positive for the region; and the Tucson Metro Chamber is leading efforts to augment direct air service and streamline business approval processes.